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(Last updated: 8 Jul 2011)
Trends and opportunities
The market
Vietnam’s healthcare system remains largely underdeveloped and both the number and quality of hospitals, clinics, and doctors have not kept pace with Vietnamese society’s needs or expectations.
Current challenges
Challenges in Vietnam’s healthcare sector include:
- Most Vietnamese seek initial and rudimentary medical treatment at public hospitals clogging an already overcrowded system
- High child mortality and other national health issues – HIV/Aids, Hepatitis B & C infections, liver cirrhosis, lung disease and asthma are all on the rise
- High incidence of deaths related to road accidents
- Overcrowded facilities (particularly in pediatric wards)
- Outdated medical equipment
- Low salaries for healthcare professionals
- Insufficient government subsidy
The Vietnamese Government provides funding to the country’s healthcare system, however funding is comparatively low by ASEAN standards, with per capita spending on health in Vietnam below that of other ASEAN countries such as Malaysia, Indonesia and the Philippines.
Overcrowding in Vietnamese hospitals is a significant issue with it not being uncommon in some poorer state-run hospitals for two or three patients to share one bed. Most of the best health workers are concentrated in the larger hospitals in Ho Chi Minh City and Hanoi. Healthcare units in these large urban areas are better equipped and have more modern equipment to provide health treatment that health centres in other provinces do not have. Given this disparity, Vietnamese from rural provinces will often seek treatment in these larger urban hospitals, compounding the problem of overcrowding.
Vietnam’s pharmacies are severely unregulated and underdeveloped. There is an under supply of pharmacists in Vietnam and an oversupply of ill-regulated pharmacies, meaning patients are often given sub-standard over-the-counter (OTC) health advice. Almost all drugs are available without prescription and counterfeit drugs are not uncommon in some pharmacies. Given most antibiotics are available without prescription; a worrying trend is the increasing antibiotic resistance many Vietnamese are developing (recent tests show 70 per cent of the bacteria carried by urban Vietnamese are resistant to penicillin).
Most Vietnamese have health insurance which is compulsorily contributed to by a small levy from both the employee and employer and the health insurance market is dominated by a state-owned company, Bao Viet Insurance Corporation. Given the lack of competition in health insurance, the scheme is viewed as inadequate and ineffective in terms of meeting the health needs of a modern Vietnamese society and most health and hospital expenses still have to be met out of pocket.
However, healthcare consumption is expected to increase as Vietnam gradually implements a universal healthcare system. Currently, 34 million Vietnamese are enrolled in a compulsory government health insurance plan. The government plans to expand the system so that it covers 100 per cent of the population by 2014.
Opportunities
Vietnam’s underdeveloped health sector and Vietnam’s demand for expertise as well as its favorable demographics and high growth rates, provide significant opportunities in various health sub-sectors for Australian exporters in health expertise, goods and services.
Pharmaceuticals and nutritionals
Vietnam’s pharmaceutical market has increased significantly and will continue to increase in the next few years. Despite this strong growth, the market size is still relatively small when compared to other ASEAN countries, largely due to the low per capita spend on pharmaceuticals each year (only around US$17 per person). Vietnam’s population of over 88 million should have a larger pharmaceutical market size, however has uniquely young demographics as a result of the Vietnam War.
Nutritionals continued to see strong growth in current value terms, driven primarily by vitamins and dietary supplements as well as slimming products. Although growth was still some way short of the pre-millennial rates posted by nutritionals, particularly in vitamins and dietary supplements, it was still ahead of projections thanks to increasing consumer product awareness, improving living standards and rising health consciousness among the local population.
There is still great potential in Vietnam and industry players will need to try and continue raising consumer awareness not only of the existence of these products, but also of the benefits that they offer. Tapping into the global health and wellness trend, where relevant, will also be a good way of promoting many of the products available in the nutritionals market. All areas of herbal/traditional products recorded increasing sales in the last two years, with herbal digestive remedies and herbal child-specific dietary supplements doing particularly well.
Medical device
Vietnam’s medical device market is estimated to be growing at a rate of about 10.3 per cent annually. This high growth makes the country an excellent prospect for long-term business. Compared with Japan and China, Vietnam’s regulatory system is less cumbersome to manufacturers in terms of the documents required, costs, and time frames. However, expertise is still required to navigate it successfully.
There are four main classes of medical device purchasers. The largest is government-funded hospitals, which counts for 70 per cent of the market. Foreign-owned hospitals and clinics are also a significant destination; however, these entities usually purchase supplies from their sponsoring country. Local private hospitals will exhibit the strongest growth, while research and educational institutions will also account for some demand.
Most government hospitals purchase medical devices though bidding, which is organised on a provincial or national level by the MOH, (government hospitals can directly buy medical devices by themselves if the amount is not exceed the limit of US$5,700) while private hospitals or clinics directly purchase those from local distributors. Foreign companies are not allowed to submit a tender – it can only be done via a local partner who will liaise with the organiser to submit the required documentation.
Competitive environment
The Vietnamese Government has a commitment to rapidly develop the health sector and improve the standard of its healthcare facilities. The government health system has already forged foreign partnerships with countries such as US, Belgium and Indonesia for assistance in improving health infrastructure, training and for research exchange and transfer. The government encourages private sector participation in the healthcare system, with French and US companies the dominant foreign players in the market.
There are a growing number of international hospitals and clinics in the major urban centres such as the Franco-Vietnam Hospital in Ho Chi Minh City. Demand for better healthcare services from an increasingly wealthier Vietnamese population is driving this foreign health investment.
Despite the increasing presence of international standard hospitals in Vietnam’s large urban cities, each year over 30,000 Vietnamese travel abroad to destinations such as China, Thailand and Singapore for superior medical treatment demonstrating that current health supply is not meeting demand.
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